Fast Retailing Rises to Record After Lifting Profit Forecast

Fast Retailing Co. shares rose to a record after the Asia’s largest apparel maker increased its annual profit forecast 20 percent on strong domestic and international sales of Uniqlo casual wear.

The stock climbed 2.5 percent to close at 49,700 yen in Tokyo trading Friday, its highest level since the company listed on the exchange in 1997. The benchmark Topix ended the day down 0.3 percent.

The Yamaguchi, Japan-based company on Thursday reported that net income would be 120 billion yen ($998 million) for the year ending in August, up from a previous forecast of 100 billion yen. That compares with the 125.6 billion yen average of 18 analysts estimates compiled by Bloomberg.

Billionaire Chairman Tadashi Yanai wants to make Asia’s biggest clothing retailer the world leader, aiming to hit 5 trillion yen in sales by 2020. Fast Retailing’s priorities are to ensure stable growth for Uniqlo in Japan, while speeding up expansion of its international stores and restructuring the global brands unit, Yanai said in October.

“The new forecasts look conservative given the strong domestic business, and there is a high chance that Fast Retailing will achieve its targets,” said Mikihiko Yamato, deputy head of research at JI Asia in Tokyo.

The retailer also upgraded its sales projection to 1.65 trillion yen from 1.6 trillion yen.

Uniqlo Japan boosted sales of winter items such as ultralight down jackets and has seen strong interest in spring merchandise, as well, Nomura Holdings Inc. analyst Masafumi Shoda wrote in a report before the results. Strong sales were driven by the company’s efforts to diversify its product range and appeal to more customers, he wrote.

U.S., Australia

Domestic sales of the Uniqlo brand rose 12.1 percent year on year. International sales jumped 48.9 percent, with Asian markets such as mainland China, Taiwan and South Korea improving. Uniqlo stores in Australia and the U.S. lost money, according to the company’s financial filing.

Uniqlo’s same-store sales in Japan rose 7.2 percent in the first seven months of the current fiscal year, according to a company sales update released earlier this month. That’s twice as fast as an earlier forecast of about 3.5 percent growth for the year. Revenue per customer increased 10.1 percent in the seven-month period, the data showed.

Operating profit for the three months ending on Feb. 28 was 58.7 billion yen, according to Bloomberg calculations, beating the 43.1 billion yen average estimate of four analysts.

Weaker Yen

Uniqlo intends to each year open 100 stores in the greater China region, 30 in the U.S. and 10 in Europe, according to a presentation Yanai delivered in October.

Recent declines in the yen prompted Fast Retailing to revise its exchange-rate projections. The company now bases its full-year forecasts on the assumption the yen would average 118 per dollar, compared with 102.50 it had in January. The Japanese yen traded at about 120 yen to the dollar as of 3:45 p.m. in Tokyo on Thursday.

Fast Retailing will raise prices of domestic Uniqlo products by an average of 10 percent for its fall and winter wear this year due to the weak yen, Chief Financial Officer Takeshi Okazaki said at a briefing in Tokyo after the results.

A weaker yen pushes up import material costs while boosting the value of repatriated earnings from overseas. Each one-yen drop against the dollar increases the group’s net income by about 1 billion yen, Okazaki had said in January.

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